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On September 10, Jaiprakash Power Ventures told the exchanges, in a clarification on a news item titled ‘Abu Dhabi utility eyes JP Hydro assets in HP’, “As per (the) publicly announced policy of Jaypee Group, we are committed to unlock and enhance the shareholders’ value through various options, including, if necessary, by sale of some of its undertakings. This is a continuous exercise and, as and when any such transaction materialises, we shall make (an) appropriate announcement through the stock exchanges.”
On October 23, 2013, another news report appeared, titled ‘Jaiprakash to sell 2 India power plants to Taqa'. The company had given an identical clarification to the BSE, “...as and when any such transaction materialises, we shall make (an) appropriate announcement through the stock exchanges...”
The stock ran up an impressive 30 per cent, hitting a near–term high of Rs 20 around the time of the second news report. Even as shareholders had awaited that earlier “appropriate announcement”, not much materialised till March 3. On that day, the company said its board of directors had cleared a plan to hive off two operating plants into two separate companies and then sell it to a consortium led by Taqa India Power Ventures. The share price tumbled and settled at a much lower range of Rs 12-17.
Almost eight months after the first reports of the sale, on May 1, 2014, the Competition Commission of India put out an order clearing the deal. After some TV channels reported about the clearance, the shares started rallying again. As this coincided with the broader market rally triggered by the election results and formation of a stable government, these hit a high of Rs 25.85, a 100 per cent jump from mid-March.
Then, the stock started slipping from the second week of June. On July 2, the company said, “With reference to the news item appearing in a media report regarding ‘JSW Energy in race to buy JP Power’, Jaiprakash Power Ventures Ltd has clarified to BSE that the said news item is purely based on market speculation and the company does not comment on any such market speculation.”
On July 24, it informed the exchanges that the deal with Taqa had been called off. Four days later, JP Ventures informed BSE that it had entered into a memorandum of understanding on July 27 with Reliance CleanGen Ltd (RCL), a fully owned subsidiary of the Anil Dhirubhai Ambani Group’s (ADAG’s) Reliance Power, for divestment of three hydro power plants — Baspa-II, Vishnuprayag and Karcham Wangtoo.
Last week, it said this deal had also been called off “due to differences of commercial aspects” and another “binding” agreement had been signed with the JSW group. News reports that followed have quoted anonymous executives trying to emphasise how the ADAG deal was ‘non-binding’ and the JSW one is ‘binding’. Which made shareholders wonder if the ADAG deal was non-binding, why didn’t they get to know about it in the July announcement to the exchanges?
The episode has dragged on for too long for stakeholders’ comfort and the way they’re coming to know of things, in the form of clarifications of news appeared elsewhere rather than in the form of official announcements. leaves a bad taste and raises corporate governance and regulatory concerns. No wonder, the shares have shed most of their gains and were changing hands at Rs 12.80 on Monday. It is high time the company gave a clear and detailed statement, explaining the events of the past one year before we hear it from elsewhere.
